From the July 2022 issue of HealthCare Business News magazine

In rural areas, where 46 million Americans lived in 2020, people are older, sicker, and less likely to be insured or seek preventive services than in urban areas. Roughly 1 in 3 rural residents are on Medicare and nearly 1 in 4 under age 65 rely on Medicaid as their primary source of healthcare coverage.

Not surprisingly, the closing of rural hospitals can prove devastating to the communities they serve. If nothing else, they significantly reduce people’s access to healthcare services, particularly in less densely populated places. One-way travel for health care services increased about 20 miles from 2012 to 2018 in rural communities in which hospitals had closed, and travel for less common services increased even more, the Government Accountability Office reported in 2020.


In a new report, The Impact of COVID-19 on the Rural Health Care Landscape, BPC recommends that policymakers take several short-term steps to immediately stabilize and strengthen access to Critical Access Hospitals (CAHs) and other small rural hospitals and rural health clinic services. As the PHE and federal relief end, the short-term steps would serve as a bridge to longer-term reforms.

For the short term, policymakers should provide full relief — until two years after the PHE ends — to rural hospitals from the 2% cut to Medicare’s fee-for-service payments under the budget procedure known as “sequestration”. Policymakers suspended the cut during the pandemic but under current law, a 1% cut returned on April 1, and the full 2% cut will return on a permanent basis on July 1.

Policymakers also should increase Medicare’s reimbursements for CAH services by 3% starting in fiscal 2023. Under current law, CAHs receive 101% in reimbursements for reasonable costs. This proposal would increase reimbursements by another 3%, up to 104% of costs.

The secretary of Health and Human Services (HHS) should give states the flexibility they had before 2006 to allow small rural hospitals that are otherwise ineligible for CAH status to apply for it through a “necessary provider” designation process. That would enable eligible rural hospitals to begin to receive Medicare cost-based reimbursements, while requiring them to downsize in return. Policymakers also should consider a provision in the proposed Rural Hospital Closure Relief Act, or something similar, that would allow rural hospitals that meet certain criteria to convert to CAH status, enabling struggling larger rural hospitals to downsize and remain open.

July 2022 Magazine

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